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Goldman Sachs gets clocked. The hunter becomes the prey

As Wall Street bombshells go, the lawsuit that the Securities and Exchange Commission filed against Goldman Sachs Group Inc. is about as big as it gets.

The lawsuit alleges Goldman devised a deliberate garbage can of securities for one client, Paulson and Co. (no relation) so they could short it, then got other clients to buy it, saying Paulson was bullish on it and had played no part in choosing the garbage (when in fact, they had.)

It’s hard to imagine an allegation by the government that could be more damaging to Goldman’s reputation. This wasn’t the American public at large that Goldman supposedly ripped off, which might be forgivable or even praiseworthy from the view of Goldman’s shareholders. These were Goldman clients that Goldman allegedly ripped off, in an effort to please another Goldman client.

Credit Writedowns, no friend whatsoever of the parasite that is Goldman Sachs, says given the huge amount of fraud waiting to be prosecuted out there, Goldman has been deliberately targeted by the Feds. I agree. Capital Hill hates to take a fall for anything. Goldman is now the designated evildoer of the moment (there are plenty of others.) Given the huge number of enemies Goldman has made by their sleazy behavior and now that it is obvious they swindle their own clients, no one will mourn their fall. In fact, they’ll probably be lining up to kick Goldman in the teeth.

But we need to see Goldmanites going to prison. We’ve had far too much of the stiff fine and no criminal prosecution for executives who are clearly criminals.